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ICYMI: Governor Hochul Announces S&P Upgrades MTA Credit Rating and Rating Outlook

Updated Oct 3, 2023 8:00 p.m.

Rating Upgraded to A- With an Improved Outlook to Positive Based on Significant Increase in Dedicated State Tax Revenues  
S&P’s Rating Improvement Follows Improved Credit Rating Outlook by Moody’s  

First Time in Over 20 Years the Authority Has Projected a Balanced Budget for Five Consecutive Years  

Governor Kathy Hochul today announced the Metropolitan Transportation Authority received an upgraded credit rating from Standard & Poor’s Global Ratings, which improved the MTA’s Transportation Revenue Bonds rating from “BBB+” to “A-” and the rating outlook from “stable” to “positive.” S&P commented that it is making the update based on a combination of improving ridership and increased financial flexibility and operating stability resulting from federal support, and significant increase in State tax support secured by Governor Hochul in the latest State Budget, which led the MTA to forecast five years of consecutive balanced budgets for the first time in its history. This news follows an improved rating outlook by Moody’s Investors Service, previously announced on Tuesday, Sept. 19.   
"The MTA is a critical resource for millions of New Yorkers, and that's why I fought so hard to save them from the looming fiscal cliff," Governor Hochul said. "The budget investments we made this year will make transit better for commuters throughout the region, and I'm pleased to see S&P recognizing these investments through the improved rating outlook and an improved bond rating." 

The positive outlook reflects that there is at least a one-in-three chance that the rating could raise over the two-year outlook period if the MTA is able to meet or exceed near-term expectations. The improved rating is expected to boost investor confidence in the MTA and could lead to reduced interest rates paid by the MTA on future capital program bonds issued using the Transportation Revenue Credit.  
MTA Chair and CEO Janno Lieber said, “There’s a reason Wall Street is expressing confidence in the MTA’s financial condition: the bold leadership demonstrated by Governor Hochul in the 2023 NYS Budget. While transit agencies nationwide are struggling with impending financial crises, the MTA has five years of balanced budgets and is adding, rather than cutting, service for New Yorkers.”    
MTA Chief Financial Officer Kevin Willens said, “We are pleased that today’s upgrade from S&P recognizes the MTA’s improved financial stability, including five years of projected balanced budgets, demonstrated State and City support with recurring revenues, and strong ridership recovery consistent with our financial plan projections.” 
In July, the MTA released its five-year financial plan that projects a balanced budget through 2027, the first time in more than 20 years the Authority has projected a balanced budget for five consecutive years.  
A one-time State subsidy of $300 million, new dedicated revenue funding sources to help offset lower fare revenues, including an increase to the Payroll Mobility Tax, increase of City funding for paratransit, and other dedicated taxes in the FY 2024 New York State Budget, have strengthened the MTA’s financial profile, along with a modest fare and toll increase.  
At the same time, the MTA’s post-COVID ridership recovery continues to track along the mid-point of a range predicted by McKinsey in July 2022, with daily ridership now regularly surpassing two thirds of pre-COVID levels or 6.5 million trips on a daily basis.  
The credit rating outlook of MTA’s Transportation Revenue Bonds, backed by a diverse basket of revenues including fares and tolls paid by MTA customers and State revenue streams, reflects the performance of the operating budget and is a barometer of the MTA’s overall financial health.  
Prior to the COVID-19 pandemic, the credit was rated A with a negative outlook. In March 2020, the credit rating was downgraded to an A-, and in July 2020 to BBB+ with a negative outlook. On March 8, 2021, S&P recognized federal covid relief funding packages were being made available to the MTA and transit agencies across the country and revised the bonds’ outlook to stable.